Merger company does not change. In acquisition a

Merger means “to combine”.

Merger occurs by the combinationof two equal companies to become one entity. There directors are shareholders. What isAcquisition?Acquisition means “to acquire”. Acquisition occurs when large company acquires smallfirm. The name and legal structure of large company does not change.  In acquisition a takeover is preplanned and orderlymannered in which both parties strongly agreed.Types of merger:There are fewtypes of merger include:1.     Horizontalmerger2.

     Vertical  merger3.     Marketextension merger4.     Productextension merger5.     Conglomeration Horizontal merger: A horizontal merger two companies compete each other and share productlines and market.Vertical merger: A vertical merger takes placebetween two companies which are producing different good or providing differentservices.

Market extension merger: Two companieschoose different markets to sell same product.Product extension merger: Two companieschoose same market to sell different products.Conglomeration: In this merger the business ofboth companies does not relate each other. Why companiesmerge with or acquire other companies?·        Companieswant to produce product at lower cost and want to increase their performance.·        Inmerging and acquiring companies have an opportunity to grow market shares.·        Inmerging and acquiring executives want to eliminate future competition to growtheir market.·        Financialcrisis and lower demand of product is main reason of merger and acquire. Some reasons merger and acquisition fail:·        Thereis poor communication between the employees of two companies having same rank.

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·        Sometimesculture differences create problem.·        Internetconflict occurs between executives and employees.·        Newdress code and time recording procedures irritate many employees.·        Changingin human resource policies create problem and sometimes high performingemployees quit their job. Advantages of merger and acquisition:·        Productionis increase for larger period of time and buyer power is increase.

·        Mergerand acquisition use innovative techniques to decrease financial risk.·        Bymerging or acquisition production of the business becomes less expensive andmore profitable.·        Itwill be less expensive to buy a business instead of expending their ownbusiness.·        TheCEO’S can easily share their skill and knowledge. Purpose of acquisitionand merger:The main purposeof merger is to decline competition and increase operational efficiency and themain purpose of acquisition is to increase development.